Texas Rep. Granger blocks $450 million in aid for Egypt

WASHINGTON -- U.S. Rep. Kay Granger of Fort Worth blocked the transfer of $450 million in economic aid for Egypt's cash-strapped new government Friday, saying she was "not convinced of the urgent need" and could not support it.

"This proposal comes to Congress at a point when the U.S.-Egypt relationship has never been under more scrutiny, and rightly so," said Granger, the Republican chairwoman of the powerful House subcommittee on state and foreign operations.

"I am not convinced of the urgent need for this assistance and I cannot support it at this time. As chair of the subcommittee, I have placed a hold on these funds," she said.

The State Department notified Congress on Friday that it was preparing to release the money, part of $1 billion in debt relief that President Barack Obama said the U.S. would give Egypt to stabilize its faltering economy and support its shaky transition to democracy under new President Mohammed Morsi.

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Granger was named chairwoman of the subcommittee in 2011 when the GOP took control of the House.

The relationship between the countries has been rocky since President Hosni Mubarak, a U.S. ally, was overthrown last year. Egypt angered Washington when it cracked down on democracy advocates and groups this year, including three U.S.-funded nongovernmental organizations.

More recently, demonstrators breached the U.S. Embassy in Cairo to protest an anti-Islam video, and some in Congress have called for cutting off aid. The United States provides Egypt with $1.55 billion annually -- $250 million in economic aid and $1.3 billion in military aid.

The cash transfer would have come from money that had already been appropriated.

Granger spokesman Matt Leffingwell said the $450 million transfer was apparently timed to bolster U.S. relations.

"Now would not be an appropriate time," Leffingwell said, because "we don't know who our partners are in Egypt."

A senior State Department official said the United States remains committed to a democratic transition in Egypt and still sees support for economic growth as vital to protecting peace and security. The official said the administration will work with Congress in the coming weeks to make the case that the budget is in the best interests of the United States.

The official was not authorized to speak publicly about the negotiations and discussed the situation on the condition of anonymity.

In December, Congress made aid for Egypt contingent on a determination that the government "is supporting the transition to civilian government including holding free and fair elections; implementing policies to protect freedom of expression, association and religion and due process of law."

Secretary of State Hillary Clinton, in New York for the U.N. General Assembly, met Friday with a group of countries, seeking to support Middle Eastern nations moving toward democracy.

Clinton called on all U.N. countries to support these nations.

"Many of our partners are also making the difficult transition from protest to politics, and they need our support as they take on the different responsibilities of leadership," Clinton said at the G8-Deauville Partnership with Arab Countries in Transition.

"But economic and social challenges did not disappear with the dictators," she said.

Clinton has repeatedly warned that failing economies create openings for extremists to take advantage of grievances, particularly among the young and unemployed.

The issue of foreign aid has made an unexpected appearance in the presidential campaign.

In a speech in New York on Tuesday, Obama's Republican challenger, Mitt Romney, called for revamping assistance to focus more on investments in the private sector than on direct aid -- a shift that administration officials have said is under way.

While Romney did not directly address aid to Egypt, he cited Morsi's membership in the Muslim Brotherhood as one of the alarming developments in the Middle East, along with the war in Syria, Iran's pursuit of nuclear weapons and the killing of the U.S. ambassador to Libya.

(This report includes material from The Associated Press, Bloomberg News and The New York Times.)